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For lovers of bun fights, does it get much better than seeing billionaire investor George Soros taken on by a distinguished academic? A professor at one of the UK's leading business schools has just thrown the first bun with his accusation that Soros, who famously shorted sterling in 1992, had remarkable "hubris" for having the gall to criticise derivatives.

It started when Soros last week attacked collateralised debt obligations for being designed purely for fees and commissions and for having attempted to create value "out of thin air".

But Gordon Gemmill, Professor Emeritus of Finance at Warwick University Business School, was unimpressed and has called Soros a hypocrite. In response, he wrote a letter to the Financial Times this morning that criticised Soros for attacking derivatives when he made $1bn (€750m) using similar instruments to short Sterling in 1992.

"The hubris of George Soros in condemning derivatives is remarkable," he wrote.

Speaking to Financial News today, Gemmill said CDOs were products that investors had demanded on account of the higher yields they offered.

"There is little evidence that CDOs caused systemic risk and there is no simple test to determine whether a derivative trade confers value on society," he said.

Gemmill said that US regulator the Commodity Futures Trading Commission was able to test the economic purpose of derivative products before passing them for use, but that it rarely vetoed new forms given the difficulty of assessing social benefit.

Gemmill said dervatives were vital for price discovery, cheaper than using underlying assets and helped to reduce opportunities for arbitrage. He added that investors were crying out for a market in credit default swaps before it was finally constructed.